Tracking the Retail Rebound

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You can\’t open a newspaper or turn on the TV without seeing the good news: U.S. consumer sentiment is strong and the outlook for retailers has shifted from, \”how long will we be able to hang on,\” to \”just look at our rebound!\” That\’s a far cry from just a few years ago, when the media was sounding the alarm for brick-and-mortar retailers, because the online shopping juggernaut seemed to signal the demise of traditional in-store retailing.

Now we\’re seeing retailers like Target, Walmart, Macy\’s, Kohl\’s, and Nordstrom reporting strong quarterly sales, and that\’s putting retail stocks on the upturn. Although the optimistic consumer outlook is certainly a key reason for rising sales, it\’s also important to give credit where it\’s due: Retailers have been doing the work needed to make themselves relevant to shoppers again.

Once they stopped playing \”catch-up,\” traditional retailers have at last become experts in blended retail, which combines the power and immediacy of online shopping with the personal experience of traditional retail stores. They\’re also unafraid to take chances on new ideas and new technologies that keep customers shopping – both online and in brick-and-mortar stores. (And on the opposite extreme, we see online retailers like Amazon investing in off-line retail stores.)

Another example of retailers offering an omnichannel approach to shopping is apparel retailer J.Crew, which recently announced it was partnering with Amazon to open a digital storefront for its lower-priced Mercantile brand in an \”if you can\’t beat them, join them\” strategy. With the Amazon Fashion marketplace now aiming its sights on the U.S. apparel industry, it sure seems like a good strategy for J.Crew to ride on Amazon\’s strength.

Given the increase in the percentage of online shoppers buying apparel online, the time is ripe for digital storefront emphasis. According to NPD\’s Checkout E-commerce service, nearly half of all online shoppers made an apparel purchase in the 12-months ending July 2018.

Traditional brick-and-mortar retail stores like J.Crew have been reinvented to be more consumer-centric. Some retailers are enhancing their in-store experiences, putting guests at the center. Others are offering faster delivery or pick-up and customized shopping experiences.

The recipe for retailer success is a simple one: Focus on getting the basics right and invest in brand-complementing innovations that support what retail customers are asking for.In the age of social media, transparency and authenticity are highly prized by consumers, particularly when retailers and brands communicate with younger generations like Generation Z. Forward-thinking retailers are already on the case, leveraging new and enhanced technologies and finding innovative ways to encourage as much demand as possible from this new breed of consumers.

Here are a few business prescriptions that can help retailers remain on their upward trajectory:

  • Offer even more unique products and brands
  • Increase innovation in products, to stimulate sales (not just replenish them)
  • Improve cadence for products, so they align with consumer needs – like timing sales of cold-weather clothing when it\’s actually cold outside.

Of course, the upcoming holiday season, which is always the make-or-break season for retailers, will be the ultimate case study for the retail industry\’s health into the coming year.

Will consumer sentiment remain strong? Will brick-and-mortar retailers find effective and innovative ways to keep customers coming back? We\’re on ready alert to report what will happen.



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